Cruise giant cuts commission to tackle discounters

Complete Cruise Solution, the trade arm of P&O Cruises, Princess Cruises and Cunard is poised to announce radical changes to its trade commercial terms, including reducing commission, for 2012.

Travel Weekly understands talks have already started with agent partners about the plans including what will be seen as a controversial cutting of basic commission to 5% from 15%.

Sources close to CCS would not confirm the commission cut but insisted the package of changes, due to be officially announced at the end of this week, will be good for agents. However, some agents will fear the move is part of a major drive to increase direct sales.

The CCS source said: “We’ve got a whole suite of changes and commission is a part of that. There are a whole load of things we are going to do differently. It’s a combination of changes, not just one thing.”

Travel agents are paid around 12%-15% commission on cruise sales, but competition between agents means they routinely give away at least 10% away in discounts and so earn far less.

Although cruiselines are powerless to stop this without falling foul of UK laws on pricing, they are keen to find ways to combat heavy discounting in the industry.

Cruise is unusual in the travel industry in that third party sales account for the vast majority of bookings, averaging close to 90% and higher for some operators.

The remaining CCS travel agent partners are due to be told the details of the changes in face-to-face meetings and webinars on Wednesday, Thursday and Friday.

One leading UK cruise travel agent specialist, who had not heard about the planned changes, said they could be good for the industry if they tackle discounting.

“I would like to think they are not going to cut off their noses to spite their faces by just lowering commission because it would not work.

“But if they did it in a way that they can stop people giving commission away and agents can sell cruises at the correct price that would certainly be good for us.”

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